Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 15:- INCOME TAXES

a. Israeli taxation:

1. Corporate tax rate:

Taxable income of the Israeli companies is subject to the Israeli corporate tax at the rate as follows: 2016 - 25% , 2017 - 24% and 2018 - 23%.

In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Achieving the Budget Targets for the 2017 and 2018 Budget Years), 2016, which reduced the corporate tax rate to 24%, (instead of 25%) effective from January 1, 2017 and further to 23%, effective from January 1, 2018.

2. Tax benefits under the Law for the Encouragement of Industry (Taxation), 1969:

The Company has the status of an “industrial company”, as defined by this law. According to this status and by virtue of regulations published thereunder, the Company is entitled to claim a deduction of accelerated depreciation on equipment used in industrial activities, as determined in the regulations issued under the Inflationary Law. The Company is also entitled to amortize a patent or rights to use a patent or intellectual property that are used in the enterprise’s development or advancement, to deduct issuance expenses for shares listed for trading, and to file consolidated financial statements under certain conditions.

3. The Law for the Encouragement of Capital Investments, 1959 (the “Capital Investments Law”):

On August 5, 2013, the Israeli “Knesset”, or Cabinet, issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013, which consists of Amendment 71 to the Law for the Encouragement of Capital Investments (the “71 Amendment”). According to the 71 Amendment, the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A: 9%).

The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise’s earnings as above will be subject to tax at a rate of 20%.

b. Non Israeli subsidiaries:

Non-Israeli subsidiaries are taxed based on tax laws in their respective jurisdictions. The Corporate income tax rate of significant jurisdictions are as follows:

	Tax rate
Mexico		30	%
Brazil		34	%
Argentina		35	%
United States (*)		35	%

(*) Federal.

c. Income (loss) before taxes on income:

	Year ended December 31,
	2018			2017		2016
Domestic		9,193			8,813		5,936
Foreign		(513	)		487		(743	)
		8,680			9,300		5,193

d. Deferred taxes:

1. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and amounts used for income tax purposes. Significant components of the deferred tax liabilities and assets of the Company and its subsidiaries are as follows:

	December 31,
	2018			2017
Reserves and accruals		381			392
Carryforward tax losses		17,954			23,950
Other temporary differences		7			666
Total deferred tax assets before valuation allowance		18,342			25,008
Valuation allowance (2)		(5,021	)		(9,229	)
Net deferred tax assets		13,321			15,779
Goodwill and other intangible assets		(5,521	)		(6,696	)
Other temporary differences		(12	)		(38	)
Total deferred tax liabilities		(5,533	)		(6,734	)
Total deferred tax Assets , net of deferred tax liabilities		7,788			9,045

2. The Company and its subsidiaries have provided valuation allowances in respect of deferred tax assets resulting from tax losses carryforward and other temporary differences for amounts that are more likely than not will be realized in the foreseeable future.

3. Reconciling items between the statutory tax rate of the Company and the effective tax rate:

	Year ended December 31,
	2018			2017			2016
Income before taxes, as reported in the consolidated statements of operations		8,680			9,300			5,193
Statutory tax rate		23	%		24	%		25	%
Theoretical tax expenses  on the above amount at the Israeli statutory tax rate		1,996			2,232			1,298
Tax adjustment in respect of different tax rates in subsidiaries and changes in tax rates		(530	)		(536	)		118
Change in valuation allowance in respect of deferred taxes		9			(8,950	)		-
Operating carryforward losses for which a valuation allowance was provided		52			3			197
Realization of carryforward tax losses for which a valuation allowance was provided		(90	)		(404	)		40
Provision for uncertain tax position		144			127			-
Nondeductible expenses and other permanent differences		172			307			192
		1,753			(7,221	)		1,845

e. Carryforward tax losses and deductions:

Carryforward tax losses of the Company totaled approximately $78,848 (including a capital loss in the amount of approximately $41,262) as of December 31, 2018. The carryforward tax losses have no expiration date.

Carryforward tax losses of Pointer Argentina are approximately $57 as of December 31, 2018. The carryforward tax losses will expire from 2020 to 2023.

Carryforward tax losses of Pointer Mexico totaled approximately $1,943 as of December 31, 2018. The carryforward tax losses will expire from 2019 to 2028.

Carryforward tax losses of Pointer Brazil totaled approximately $3,739 as of December 31, 2018. The carryforward tax losses have no expiration date.

Carryforward tax losses of Pointer South Africa totaled approximately $6,631 as of December 31, 2018. The carryforward tax losses have no expiration date.

f. Final tax assessments:

Tax assessments for the Company are considered final as of the 2014 tax year.

Tax assessments for Pointer Mexico are considered final as of the 2009 tax year.

Tax assessments for Pointer Argentina are considered final as of the 2013 tax year.

Tax assessments for Pointer South Africa are considered final as of the 2017 tax year.

g. Taxes on income (tax benefit) included in the consolidated statements of operations:

	Year ended December 31,
	2018			2017			2016
Current		994			927			501
Deferred		759			(8,148	)		1,344
		1,753			(7,221	)		1,845
Domestic		1,810			(7,674	)		1,768
Foreign		(57	)		453			77
		1,753			(7,221	)		1,845

h. Uncertain tax position:

As of December 31, 2018 and 2017 balances in respect to ASC 740, “Income Taxes” amounted to $ 271 and $ 127, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:

	December 31,
	2018		2017
Balance at the beginning of the year		127		-
Additions based on tax positions taken related to the current year		144		127
Balance at the end of the year		271		127

Substantially all the balance of unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate.